Sunday, October 05, 2008

As expected the Hypo Real Estate bailout was announced before the markets open. At least the government has managed to bring the financial sector to take up to € 8.4 billion of the guarantee. On top of this i assume the step to guarantee all German banking deposits will force other countries to follow. What a difference a week makes..... Only a few days ago our leaders were ranting on the mess outside of Germany and especially the US........

NYTDepfa, a Dublin-based lender that Hypo acquired last year, is at the center of its problems. Depfa underwrote a package of municipal bonds which were subsequently downgraded by ratings agencies. That step obliged Depfa to buy the bonds back, a contractual requirement that would create almost immediate liquidity problems at Hypo itself, given the difficulty of getting short-term funding in today’s drumtight credit markets

Germany guarantees savings to avert panic Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.

European leaders eye German moves UK and other European officials on Sunday expressed surprise at Germany’s abrupt move to guarantee German private bank accounts, amid concerns other European governments would have to follow Berlin’s lead and offer similar safeguards to savers, to avoid a cross-border flight of capital to more secure banks

One UK official said there was annoyance that German chancellor Angela Merkel had acted unilaterally only hours after attending an economic summit in Paris at which she agreed there should be greater cross-border co-ordination of measures during the economic crisis